A premium is considered to be paid timely, so as to permit continuation of coverage, if it is mailed on or before the last day of the grace period. Because of the time that elapses between the mailing of the payment and the entry of the payment on the beneficiary's record, there may be some instances in which the record will not indicate payment until some time after the end of the grace period. This fact has been considered in determining action on SMI coverage to be taken at the end of the grace period.

When the direct billing record does not reflect payment of premiums by the end of the grace period, the record will reflect a termination of enrollment for nonpayment of premiums. This prevents possible dissemination of erroneous coverage information and thus minimizes Part B overpayments. If a payment is received during the due process period, the Medicare termination date will be removed.

A notice of termination of enrollment for nonpayment of premiums will generally be mailed to the enrollee about 30 days after the end of the grace period. This 30-day period provides time for processing any premium payments received late in the grace period, and avoids incorrect notices that could cause the enrollee needless anxiety. The date shown on the notice is the first day of the second month following the last month of coverage or, in the case of a delayed notice, if it is mailed after the fifteenth of a month, the first day of the next month.